Driver and Vehicle Licensing Act, 1999 (Act 569). This amendment came with the introduction of a new Luxury Vehicle Levy.

What are the changes?

1. Individual Income Tax – Residents

An income tax band of 35% has been introduced. Up to 31st July 2018 the highest marginal rate of 25% applied to annual incomes exceeding GHC39,892.00.

The tax bands have been adjusted so that the 25% rate now applies to annual incomes from GHC38,892 to GHC120,000.

The table below compares tax rates before and after 1st August 2018:

ANNUAL INCOMES (GHS)

BEFORE 1ST AUGUST 2018

FROM 1ST AUGUST 2018

CHARGEABLE INCOME

RATE OF TAX

(%)

CHARGEABLE INCOME

RATE OF TAX

(%)

First

3,132

0

3,132

0

Next

840

5

840

5

Next

1,200

10

1,200

10

Next

33,720

17.5

33,720

17.5

Exceeding/ Next

38,892

25

81,108

25

Exceeding

n/a

n/a

120,000

35

MONTHLY INCOME (GHS)

BEFORE 1ST AUGUST 2018

FROM 1ST AUGUST 2018

CHARGEABLE INCOME

RATE OF TAX

(%)

CHARGEABLE INCOME

RATE OF TAX

(%)

First

261

0

261

0

Next

70

5

70

5

Next

100

10

100

10

Next

2,810

17.5

2,810

17.5

Exceeding/Next

3,241

25

6,759

25

Exceeding

n/a

n/a

10,000

35

2. Non- Resident Individual Tax Rate

The income tax rate applicable to income of a non-resident has changed, as shown in the table below:

BEFORE 1ST AUGUST 2018

FROM 1ST AUGUST 2018

RATE

RATE OF TAX

20%

25%

3. Value Added Tax Changes

The table below shows the changes to the VAT rates:

BEFORE 1ST AUGUST 2018

FROM 1ST AUGUST 2018

RATE

RECOVERABLE?

RATE

RECOVERABLE?

VAT

15%

YES

12.5%

YES

National Health Insurance Levy (NHIL)

2.5%

YES

2.5%

NO

Ghana Education Trust Fund Levy

N/A

N/A

2.5%

NO

The rules on recoverability have also changed.

Before 1st August 2018, VAT and NHIL of 17.5% of the cost of taxable supply was recoverable. After 1st August 2018 only VAT of 12.5% of the cost of taxable supply is recoverable. The levy is not recoverable and becomes part of your cost.